Stonehouse Mutual Water Company
Company Name: STONEHOUSE MUTUAL WATER COMPANY
Date of Incorporation:1968-06-05
Type: Domestic Stock
Address P.O. BOX 5148, HCR 82, SUITE E,
MIDDLETOWN, CA 95461
Registered Agent Name: MEL AUST
Registered Agent Address:17569 SPRUCE GROVE ROAD EXIT, SUITE E,
MIDDLETOWN, CA 95461
updated on 2022-03-27
Do you know how an illusionist works? He makes you think you see what you don’t see; therefore, it’s an illusion. With that in mind, who do you think is really determining the future of Hidden Valley Lake?
The problem with living in the same area for so long is the knowledge about the area one acquires. Some sought after and some just by circumstances. But, however it is gained, it is yours to keep forever. Unfortunately, as age creeps up on one, sometimes that knowledge becomes a little foggy but also some knowledge is so ingrained it will last until the circuits quit functioning.
One thing I know for sure though is I served on the Board of Directors of the Stonehouse Mutual Water Company which was the water and sewer company for Hidden Valley Lake, a.k.a. Hidden Valley. That is a true fact but the foggy part is just which years I did. I know I lived in Hidden Valley from November 1986 through May of 1989 so somewhere in there I served as Secretary of the Board of the Water Company.
Stonehouse Mutual Water Company was a mutually owned water company that was owned solely by the property owners of Hidden Valley Lake but did not include the Ranchos. Each lot of land represented one share of the mutual. If you owned two lots, you owned two shares of the mutual and so on. So with 3,000 plus lots being serviced the mutual was made up of that many shares. And only a shareholder could serve as a Director on the Board and only a shareholder could vote on issues concerning the company.
During those years Stonehouse Mutual Water Company was the only entity in Hidden Valley that was operating in the “black”. Water use was basically unlimited and the only lots on sewer were those around the lake, which included mine. Those on the sewer were totally responsible for its operation and were assessed the full cost of its operation and since all operational cost of the water company had to be borne by the shareholders, it cost what it cost and everybody paid.
The Stone House Mutual Water Company owned desirable assets which included the water wells, right of ways, pipelines, treatment plants, storage tanks, pumps, vehicles, real estate, etc. And by law they also had to hold several hundreds of thousands of dollars in cash reserves at all times. My memory says the assets totaled in excess of three million dollars when I left the Board. When you do the math to figure share value based on round numbers, each share should have been worth nearly one thousand dollars at that time. Since the laws regulating mutual water companies are very restrictive I can safely assume the value of the shares continued after my service.
Along the way, a Community Services District was voted into existence inside Hidden Valley that was constantly trying to “take over” the Water Company. They were favored by Lake County Government as birds of a feather. They raised money through assessments yet had nothing but an office and a Board of Directors. They did studies and fought the mutual over who would provide sewer service to greater Hidden Valley.
Today we know who won the battle. Private ownership lost and government won. Is that bad? You be the judge but I always wondered how one group of people convinced nearly 3,000 property owners to turn over in excess of $3,000,000. to the government without compensation, and to my knowledge, that’s exactly what happened. Each shareholder, or property owner, held a share worth around $1,000. of which around one third of that value would have been in cash. Granted, a dramatic increase in real estate values have more than made up for any value lost to the property in the transfer to the government, but there was more than dollar value involved.
So where am I going with this issue? I’m stopping at the door step of the Hidden Valley Lake Community Services District a.k.a. the CSD.
Do you know there would not even be a discussion regarding development of the Arabian Horse Ranch, at the proposed scale, if the property owners of Hidden Valley still owned the water company? When Hidden Valley handed their water company to the government (the CSD) on a silver platter, at that moment, they not only gave away several million dollars in privately held assets to the public, they gave away control of their future as well.
Now the Valley Oaks Development and the future expanded development of Coyote Valley is where the CSD will take all of us. If you favor growth, then you are okay with that, but if not, then you have a problem. The CSD is building a huge sphere of influence with the assets that were once only available to the property owners of Hidden Valley Lake. Today, and in the future, anyone who lives in the District does and will benefit from those assets and is eligible to serve on the Board of Directors and that will include future residents of Valley Oaks or whomever.
It is my understanding the CSD has already given the Valley Oaks Development the “green light” regarding water and sewer service once LAFCO approves the expansion. (This then proves the CSD does not have responsibility just to the property owners of Hidden Valley.) And it is too my understanding the CSD is busily working to secure more water for the continued development of Coyote Valley.
Some will argue on behalf of the CSD that only the CSD could have successfully developed and implemented the current sewer system at Hidden Valley and that handing control to them was the only way, and that may be true. However, the property owners could have easily retained and operated their water system as a mutual water company, which would have left control of any future development in their hands. Providing sewer service is one thing, providing water is another and they do not have to be hand in hand.
So what are the dreams and aspirations of the CSD? Currently, the Hidden Valley Lake Community Services District controls its sphere of influence and is working toward securing whatever water it will need to meet the needs of the development of all Coyote Valley and beyond. We’ve heard comments about the new Hidden Valley Lake 95467 incorporating into a city and of plans for dams on Putah Creek. More than once it has been published that “Hidden Valley Lake” is now the second largest community in Lake County. The management of HVLA has even announced their community is now larger than Lakeport. So is their plan to be larger than the city of Clearlake?
Remember, whoever controls the water controls the future, and that should be a flashing red light reminder to the citizens of the Callayomi County Water District and everyone else in the Upper Putah Creek water shed. History shows there are those who care not one whit about anyone but themselves and for us we were reminded of that when it came in the form of a law suit. Solano County wanted our water and spent millions of dollars trying to take it from us. The reason they did? Money and power. They didn’t need the water; they wanted to sell it to someone else.
So while you are digesting all of this there is an old cliché I want to share with you for you to think about: “The proof is in the pudding.” Now the “pudding”: A few years ago there was a big move put on the South Lake County Fire Protection District and some of the players then are the same players today. My wife and I were both in attendance at a Fire Board meeting during the process when a Hidden Valley resident stood and announced, “Middletown will get exactly what it deserves, nothing!” There were also veiled threats bantered about and when the dust finally settled some time latter, Hidden Valley had a fire station staffed with paramedics 24 hours a day and Station 60 in Middletown went un-staffed. Has the move started again on a different front? Is the plan to leave Middletown with nothing? Just how does the future of Middletown fit into the dreams and aspirations of the Hidden Valley Lake Community Services District? History does not reflect a picture that favors Middletown.
Bill Wink.com 2004
Hidden Valley Lake Community Services District:
Changing Ownership and Operation for a Sustainable Financial Strategy
The example of Hidden Valley Lake Community Services district demonstrates how a small utility can change its ownership and operations structure to put itself on a sustainable financial footing. Hidden Valley Lake is a community of 2,400
residential lots and 34 commercial lots within a 1,400 acre service boundary.
Prior to 1993, Stonehouse Mutual Water Company (established in 1968) supplied water to the Hidden Valley Lake subdivision and sewer to 200 lots around Hidden Valley Lake. As the community grew, the financial future of the company became increasingly uncertain. As a private company, it had no access to low interest loans or grants for infrastructure projects that the community would inevitably need.
Stonehouse Mutual Water Company's financial problems led to discussions of a merger with Hidden Valley Lake Community Services District, a public utility that provided sewer service to most of the community. A merger into one utility company could provide large benefits, including:
• $300,000 savings per year in administrative and operational costs;
• Additional protection to the community through state oversight with full transparency; and
• Access to low cost loans and grants.
The two utilities merged in 1993. State law transitioned full ownership of water rights to the Community Services District and exempted the transfer of funds from Stonehouse Mutual Water to the Community Services District from taxation. For the
merger to occur, a vote from the Hidden Valley Lake property owners was required—1,544 votes were in favor with only 46 opposed.
The shift from a private to a public agency gave the utility the ability to access low interest loans and grants that were greatly needed for water and sewer infrastructure improvements and expansion for the rapidly growing Hidden Valley Lake
community. In addition, the $300,000 annual savings from the merger was used to offset new infrastructure investment. For example, the savings allowed the Community Services District to issue four sewer bonds and receive a state loan to pay for
a Water Reclamation Plant project while keeping rates stable.
In 2004, the Community Services District obtained a low interest $3 million loan as a public agency and launched the Water Infrastructure Improvement Project (WIIP) to add capacity for an additional million gallons of stored water, implement SCADA system improvements, replace water regulator valves throughout the water system, and establish new pump stations. Community Services District was also able to operate its pumps during off peak hours, accessing the lowest energy costs. These savings helped sustain the water rate structure.
Moving from the private sector to the public sector gave customers a say in decision making. Full transparency under a public agency created more confidence from the public at large. Currently, drinking water revenues are generated through:
• Water rates, which pay for the cost of operating and maintaining the water system (including improvements to increase system reliability and sustainability); and
• Water service hook-up fees, which reimburse the District for the incremental costs of capital investment and funding for improvements necessary to provide the capacity for growth.
How The Hidden Valley Lake Community Services District was able to take over
Stonehouse Mutual Water:
Hidden Valley Lake, California 95467
How did Government take Stonehouse Mutual Water Company from the property owners and vest all assets in title to the Hidden Valley Lake Community Services District (HVL – CSD).
It took an act of the California State Legislature to fleece the shareholders.
61850. Notwithstanding Chapter 4 (commencing with Section 23701), Chapter 7 (commencing with Section 24341), Chapter 8 (commencing with Section 24451), Chapter 9 (commencing with Section 24501), Chapter 10 (commencing with Section 24521), and Chapter 15(commencing with Section 24901) of, Part 11 of Division 2 of the Revenue and Taxation Code, the transfer of the assets of the Stonehouse Mutual Water Company, including its lands, easements, rights and obligations to act as sole agent of the stockholders in exercising the riparian rights of the stockholders, and rights relating to the ownership, operation, and maintenance of water and sewer facilities serving the customers of the company, to the Hidden Valley Lake Community Services District, is not a transfer subject to taxes imposed by Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code if both of the following requirements are met:
(a) The consideration for the transfer of all or substantially all of the assets is the assumption by the district of the company's liability to provide service to the company's stockholders.
(b) The legal or beneficial title to all or substantially all of the company's assets is vested in the district on or before January 1, 1995.
(c) For the one-year period immediately prior to commencement of the transfer and continuing until the transfer is completed, 85 percent or more of the company's income consists of amounts collected from stockholders for the sole purpose of meeting losses and expenses.
When the California State Legislature passed AB-1504 approximately $3,000000.00 transferred tax free from private to public ownership and private property became public property without compensation. Hidden Valley Lake Community Services District (HVL – CSD) was rich.
They built a new building and immediately began wallowing in wealth that they did not earn but acquired in a sneaky sort of way.
NOTE! The original legislation has been scrubbed and no longer exists as amending 61850 w/AB-1504. However, what is left confirms the issue.
California Laws - Government Code
TITLE 6. DISTRICTS
DIVISION 3. COMMUNITY SERVICES DISTRICTS
CHAPTER 1. AUTHORIZED SERVICES AND FACILITIES (61100-61107) (56553)
61105. (a) The Legislature finds and declares that the unique circumstances that exist in certain communities justify the enactment of special statutes for specific districts. In enacting this section, the Legislature intends to provide specific districts with special statutory powers to provide special services and facilities that are not available to other districts. (56602)
(g) Notwithstanding any other provision of law, the transfer of the assets of the Stonehouse Mutual Water Company, including its lands, easements, rights, and obligations to act as sole agent of the stockholders in exercising the riparian rights of the stockholders, and rights relating to the ownership, operation, and maintenance of those facilities serving the customers of the company, to the Hidden Valley Community Services District is not a transfer subject to taxes imposed by Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code. (56614)
CSD Wages and Benefits 2019
© Bill Wink August 2022
What could the owners of HVLA have done with $3,000,000. 30 years ago?
It was your money.
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